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How small businesses can bounce back from the shock of recent riots

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South Africa was recently rocked by the worst violence, riots and chaos that has devastated the business community.

An estimated 40 000 businesses were affected, costing the country about R50 billion in lost output and endangering around 150 000 jobs.

It is important to stress that the situation regarding riots and looting in South Africa is not a once-off phenomenon because, in the past few years, South Africa has witnessed rioting and looting as one of the reoccurring events happening in the country, which often left big and small businesses to bear the burden as they pay the price for the actions of angry citizens.

The aftermath of the Jacob Zuma imprisonment has once again put immense pressure on small and big businesses that were already disproportionately struggling with decreasing revenue and dismal forecasts of earnings due to the continuing COVID-19 pandemic and lockdowns.

The losses have had a devastating effect particularly on small businesses, which are typically not insured against damage during protests, and do not have much cash reserves at their disposal.

Some small business owners’ years of hard work and entire life savings were completely wiped out overnight, putting the reopening plans of some on hold and completely shutting down others.

Given that riots and protests are not unusual in South Africa, some people on social media have argued that South Africa is a volatile country when it comes to riots and protests, and that small businesses should have anticipated such risks and should have made an effort to obtain business insurance.

A critical question to ask is whether all small businesses can afford insurance?

In most cases we expect the answer to be ‘no’.

This is because small businesses operate under various difficult circumstances, such as liabilities of newness, smallness, poorness and lack of access to external financing.

Nonetheless, it is important to educate small businesses about the importance of getting insurance, especially any form of insurance that covers their core assets.

But more importantly, what needs more insight within the South African context is a critical discussion on how small businesses can minimise losses incurred during riots and bounce back from external shocks.

Many uninsured small businesses might not reopen unless the government helps them.

Depending on the extent of the damage across the different businesses affected during the recent protests, it could take up to 18 months to reconstruct the malls and for businesses to become fully operational again.

This means that many of the small businesses might have to temporarily change their business location or relocate completely.

The major problem with this strategy is the risk of paying double rent, both to the damaged mall as well as at the new location.

The law does not provide for these SMEs to stop paying rent to the damaged mall, regardless of whether they want to relocate.

In addition, most of the assets that these businesses had, such as furniture, equipment, inventory and debtors, were destroyed.

This is a double negative, which implies that they have lost almost all of the assets they could use as collateral to obtain loans from financial institutions, as well as having to replace these assets.

Many of these small businesses that were not insured and have very little or no cash reserves may not be able to reopen their businesses, unless they receive assistance from the government.

The South Africa government and the entire civil society have come out to condemn these barbaric actions, and have put in place some measures to redress the situation and bring stability to the country.

As part of the recovery strategies, the government funds allocated to small businesses through its different departments, such as provincial development corporations, the IDC and national youth funds, should be used to provide interest-free loans to those small businesses that were profitable before the looting crisis.

The government should also consider paying business rentals to the damaged malls until these malls reopen.

Tax incentives for some of these businesses for a certain period of time is another option to be explored.

Likewise, unemployment funds should be made available to pay their employees until they are fully operational again.

Within the context of entrepreneurship, resilience – which is viewed as the capacity of the business to recover, survive, or grow quickly following a crisis – is one of the capabilities that small businesses can deploy.

While small businesses are often regarded as less resilient because of their limited resources, this liability makes them more flexible and adaptable in the face of adversity.

Small businesses can become more resilient and less vulnerable to crises by developing an anticipated and containment mindset.

An anticipated mindset entails continuous identification of all possible problems and emergencies, while a containment mindset is about embracing flexibility and adapting when responding to crises (conceptual slack), developing capabilities to deal with losses, and making a commitment to resilience.

Small businesses can achieve these mindsets by undertaking training in metacognitive awareness, which entails developing coping strategies to respond to uncertain events, developing adaptive thinking to identify and recognise opportunities in an uncertain and dynamic context, and changing responses and strategies according to changes in the environment.

Small businesses can also develop resilience by investing in and building resources.

These resources can range from social resources (eg, support from networks of family and friends, business partners); economic resources (eg, personal savings, stokvels and financial institutions); and personal resources (eg, self-determination, inner strength, adopting a problem-solving mentality, emotion regulation and self-confidence).

As a short- to medium-term strategy, the government – through its Ministry of Small Business Development – should partner with higher education institutions and private organisations to create nationwide workshops and seminars on how to develop resilience and overcome liabilities of newness, smallness and poorness.

Small businesses are the panacea for addressing poverty, unemployment and inequality.

Small businesses should also foster cooperative relationships, as these have proven to help entrepreneurs overcome the lack of resources by sharing business resources (equipment, business space and funds).

This ultimately transforms competitive differences into potential growth opportunities for businesses.

This is one of the most important business practices adopted by many immigrant businesses for survival.

Those who need to start from scratch are encouraged to develop their businesses using what they can create with the set of resources (computer, land, skills, money and car) at their disposal, no matter how small.

Given that the future is unpredictable, instead of defining a specific plan to reach a goal/objective, such entrepreneurs should focus on what means are available to them now.

Most successful entrepreneurs around the world – and particularly in Africa, where entrepreneurs are usually constrained by limited resources and support structures – will tell you that they started their businesses with very limited or only one resource that they had at their disposal.

It might be quite difficult and painful to undergo the cycle again, so entrepreneurs should tap into their inner grit and remember that although they are starting from scratch, this time round they are wiser and more experienced, which will ultimately translate to higher achievements. 

In conclusion, small businesses are the panacea for unleashing and addressing the triple problem of poverty, unemployment and inequality that South Africa is currently facing.

So, if the government is intentional about enhancing the creation, survival and sustainability of small businesses, it becomes critical that they create an enabling environment that significantly minimises external shocks.

The government should also put in place clear short- and long-term goals to address the causes and issues that give rise to riots and provide practical solutions to transform the country.

The government should also partner with civil society and the media to spread awareness about the negative impact of destructions during riots and protests.

  • Professor Brownhilder Neneh is an Associate Professor and Academic Head of the Department of Business Management at the University of the Free State.

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Opinion

Time for AG to audit HR practices at municipalities 

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FOSTERING GOOD GOVERNANCE . . . Municipalities, including Mangaung Metro, are audited annually by the office of the AG

“We have been looted since the days of Bophuthatswana, and every five years a new mafia comes to loot us; we suffer from incompetence, corruption, and politics – it’s bad,” says a colleague about her lived experience in the Mahekeng municipality in the North-West.

The latter, together with the Free State, share the spoils of not producing a single clean audit in the 2020/21 Auditor General (AG) report.

The worst is the Free State, which has consistently failed to produce a clean audit over the past five years.

Despite the fact that the AG is religiously pointing out these glaring anomalies, municipalities have regressed over the past five years.

Municipalities heard but simply did not listen.

And this is our national shame.

The audit findings, however, come as no surprise, drawing a curtain on the municipal financial and performance reporting of the fourth administration.

To say that municipalities are in a state of perpetual depression would therefore be an understatement.

But let us get to the genesis of the AG report.

For the sake of good governance, municipalities are audited annually by the office of the AG.

At the completion of such an audit, opinion is expressed.

An unqualified opinion with no findings (clean audit) means the municipality has produced quality financial statements free from material misstatements and has produced quality performance reports that measure and report on performance in a manner that is useful and reliable and complied with key legislation.

Only 16 percent achieved this.

An unqualified opinion with findings means the municipality was able to produce quality financial statements but struggled to produce quality performance reports and/or to comply with all key legislation.

Only 40 percent achieved this.

A qualified opinion with findings means the municipality’s financial statements contained material misstatements that were not corrected before the financial statements were published. The municipality’s performance report and/or compliance with key legislation is also not adhered to.

This is true for 30 percent of municipalities.

Financial statements with an adverse opinion with findings mean the AG disagreed with virtually all the amounts and disclosures in the financial statements.

This is true for two percent.

A disclaimed opinion with findings means the municipality could not provide evidence for most of the amounts and disclosures in the financial statements, resulting in the AG being unable to conclude or express an opinion on the credibility of the financial statements.

This is true for 10 percent.

And four percent simply did not bother to submit documentation for scrutiny.

So, the audit opinion does count and gives an indication of the state of financial governance.

The March 2022 Municipal Skills and Capacity Assessment Study is yet another report confirming that our problems in local government stem from a number of known problems.

The number one problem, however, is people and behaviour.

But it is the brazen use of consultants that is an indictment of our failing skills development initiatives.

A staggering R1.26 billion was spent on consultants in one year.

And only seven percent of municipalities used consultants to bridge a vacancy gap, whereas 62 percent appointed consultants to provide for the skills deficit in finance departments.

The inability of municipalities to master credible financial reporting means that they continue to appoint consultants, without the vital element of skills transfer.

In total, 79 percent of municipalities reappointed consultants used in the previous year.

So, instead of using the enabling Skills Development legislation (in operation since 1998), managers simply take the easy route and employ consultants instead of growing their own timber.

To top it all, most of the consultants were not even used to solve complex accounting matters but were rather contracted for basics such as the recording and valuation of assets, which are the fundamentals of good asset management.

Added to that, the expected benefits of using consultants to enable quality financial statements were not always apparent, according to the AG.

So, despite the mandatory and discretionary grant system from the SETA, a ministry dedicated to local government, and the South African Local Government Association programmes, municipalities continue to decline at a too rapid pace.

So, what must be done?

The new municipal staff regulations come into effect on 1 July 2022 and are the perfect restart for local government.

Not only does it clarify the recruitment and selection process, but also sets the competency framework for municipal staff.

It further clarifies the skills development and performance management protocols that place managers at the centre of human resource development.

But the implementation of the regulations must be subjected and policed through an audit process akin to that of the AG.

Using evidence-based HR auditing will go a long way to ensure that the credibility and integrity of local government is restored.

Municipalities simply cannot be trusted to implement the regulations on their own.

They must be supported through evidence-based processes to ensure success.

And this is the challenge for the fifth administration – for politicians and administrators alike to behave themselves into a new implementation culture of excellence.

The institutions of higher learning, together with the AG, LGSETA, SALGA, NSG, and COGTA, must form a war room.

It is that big a national crisis, tantamount to a state of disaster.

There simply has to be better coordination and collaboration, as envisaged in the District Development Model.

But for goodness’ sake, let us get it right and lead – not loot.

Not through our fancy words and speeches, but through our deeds.

We must heed the advice of Peter Drucker, who said the best way to predict the future is to design it.

And may I add, to find the courage and patience to implement and see our collective local government dream to fruition.

This may very well be the last chance for municipalities to fix a broken system.

To restore hope and the confidence of South Africans.

To stop the waste.

To create pathways out of poverty, unemployment and inequality.

Decisive action is needed.

It can be done.

It must be done.

  • Dr Harlan Cloete is a research fellow in the Department of Public Administration and Management at the University of the Free State. His main research interest is exploring evidence-based HRD governance systems in the public sector, with a keen interest in local government. He is the founder of the Great Governance ZA Podcast https://anchor.fm/harlan-ca-cloete

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Opinion

An attack on student activism is an attack on our democracy

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Universities remain one of the most unequal and untransformed spaces in South Africa.

One may argue that the country itself is one of the world’s youngest democracies and faces many of the challenges that new democratic states face.

After all, the apartheid regime was “demolished” just over five quinquennials ago.

However, one may also argue that after 27 years the country should not be facing the same challenges it was facing at the dawn of democracy.

One of the most urgent issues that South Africa is facing is the failure to invest in active youth empowerment in order to enable young people to be active citizens who may tackle our country’s wide array of issues.

This is characterised by the attack of active citizenship by student activists at South African universities.

At most institutions throughout the country, university management has criminalised activism so as to easily get away with the failed project of transformation and social injustice.

The last seven years and a half have been defined by mass protests of the ongoing #FeesMustFall movement.

As we may all know, the #FeesMustFall movement is a student-led protest movement which began in 2015.

This saw a massive eruption of protests at universities across the country in a movement that redefined politics in post-apartheid South Africa and presented the evidence of a “born-free” generation telling their own story and leading discourse as well as action on transforming South Africa through the quest of free and accessible education.

After seven years, the concerns of the first #FeesMustFall generation of students are still very visible in society.

Although relative accessibility has increased due to a slight boost in public and private sector funding, many issues such as accessible, safe and secure student accommodation, food insecurity on campuses, decolonised university curricula and first-generation entry into universities still remain present.

But why has the #FeesMustFall movement lost momentum over the years?

Universities in South Africa as well as the government successfully quashed the movement by harassing and victimising student leaders and activists.

A 2019 investigation report by the Independent Police Investigative Directorate revealed that over 33 million South African rand was spent spying on #FeesMustFall activists during the 2016-17 academic calendars.

Many student activists also attested to their phones being tapped and their places of residence and those of their loved ones being put under surveillance during the period.

In order to win the fight against the #FeesMustFall movement, universities such as the University of the Free State (UFS) adopted strategies to intimidate and victimise student leaders.

In this way, they were actively infringing upon the right to protest which is enshrined in Section 17 of the Constitution, which states: “Everyone has the right, peacefully and unarmed, to assemble, to demonstrate, to picket and to present petitions.”

This is to be done peacefully and without weapons.

On March 30, 2022, UFS vice chancellor Professor Francis Petersen wrote an article titled ‘When a protest is not a protest but a crime’.

In the article, Petersen narrates the challenges faced by South African universities while strongly condemning student protests on the UFS and University of Kwazulu-Natal campuses.

On the surface level, it may seem as if this article is a genuine expression of concern about issues faced by universities throughout the country.

Unfortunately, for many student activists and student leaders, the article in subject is a manifestation of the continued attack on student activism and the victimisation of student activists at South African universities.

This article serves to outline the strategic and organised syndicate by the “old guard” collective, which seeks to crush student activism on all fronts on its campuses in order to replace it with prefect-like anointed leadership in student representation.

This collective includes government and university officials in different capacities.

They have used and are using different tools and tactics to quell activism on campuses.

As part of the fourth generation of #FeesMustFall activists, I have seen first-hand the unfair university managements’ response during peaceful demonstrations and protests at the UFS campus.

Private security companies are hired and they brutalise students engaging in peaceful protests.

It is needless to say that most universities face the same issues every year.

While we may attest that some of the issues leading to protests are sector challenges that have little to do with registration, most of the issues are operational challenges that are created by universities themselves in light of incompetence.

Issues such as on-campus and off-campus accommodation for students have been prominent during registration periods.

The UFS itself has only 5 790 beds on the Bloemfontein campus while it has over 32 000 students enrolled.

Very little has been done to fix this matter.

Accreditation of off-campus student accommodation has also been failing at the UFS for over three years.

Other issues such as verification of funding of students between the financial aid office and the finance office are always prominent every year and affect predominantly disadvantaged students.

These operational issues could easily be solved through consultative dialogue with activists and student leaders to find sustainable and efficient models.

But, no!

Universities continue to criminalise activism and harass student leaders.

The UFS has guidelines to operationalise the right to protest.

According to the said guidelines, “the UFS is committed to not only protecting or tolerating, but also enabling and indeed fostering protest.”

Yet, in 2021, the UFS took out a court interdict to ensure that student activists, including those affiliated to the South African Students Congress (SASCO), EFF Student Command and even the Student Representative Council (SRC) could not carry out their fundamental purpose of representing students views and protecting their interests.

Twenty-four students were arrested at a protest on campus and spent time in prison.

Although the university withdrew the charges in February 2022, the intention was not to serve justice against criminals, but to intimidate and victimise students and their leaders into silence.

On February 23, 13 student activists including myself were arrested at a peaceful demonstration regarding late allocation of students’ allowances.

We spent multiple days in holding.

Contrary to what Petersen claims, the situation on South African university campuses is not a situation of criminality.

It is a result of the old-guard tactics that have made it difficult for organised activism to continue, leaving students and their leaders with no option except adopting guerrilla activism for their voices to be heard.

Such tactics should be seen as nothing more than institutionalised vigilantism that seeks to undermine the highest law in the land through legal means.

Although Section 35 of the Higher Education Act, No. 101 of 1997, as amended, compels all institutions of public higher education in South Africa to have SRCs as part of their governing structures, they do not compel universities to have capacitated and conscious representatives of students.

For this reason, universities in South Africa are attacking and quelling all forms of organised activism in order for the SRC to be merely a box to tick on their campuses.

In this way, they can do as they please with the lives and future of students, with no capacitated student activists to keep them accountable or ensure sustainable transformation.

These efforts by universities are part of their fight against the #FeesMustFall movement, which continues to this day in many forms and shapes.

Stances such as those of Petersen are a danger to society because they threaten the fundamental principles upon which our democracy is built.

Such views threaten free speech, the right to education, expression and organised protest.

There is no question that student movements have played an important role in South Africa’s path to and development as a democracy throughout the years.

Organisations such as NUSAS, SASO and SASCO ensured that South Africa’s gross apartheid policies were kept on the agenda in international advocacy spaces.

In addition to this, the #FeesMustFall movement ensured that relative access to higher education is not only for the rich and privileged in South Africa.

In conclusion, institutions of higher learning that criminalise activism directly render freedom and democracy immaterial.

If solutions to the country’s sector problems in higher education are to be found, it will be through collaborative and sustainable engagements with stakeholders in the sector alongside student activists and leaders.

Any other means that claim to be putting forward solutions by criminalising the expression of those issues are mere criminality.

  • Siphilangenkosi Dlamini is an undergraduate student in political governance and transformation at the University of the Free State. A student activist and researcher, he is also the author of the book ‘Magic and Other Authentic Experiences’.

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Opinion

Time to protest against protests

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It is becoming increasingly difficult for institutions of higher learning in South Africa to maintain the delicate balancing act of finding sustainable funding solutions amid mounting pressures caused by rapidly altering learning and teaching environments, dwindling government subsidies and the massification of higher education.

And uncontrolled, violent student protests might just be the final blow that sends many tertiary institutions over the precipice.

There is no doubt that student protests have over the years played a vital part in South Africa’s journey towards and maturation as a democracy.

During the anti-apartheid struggle, student organisations such as NUSAS, SASO and later SASCO kept South Africa’s human rights violations on the international agenda through unrelenting campaigns and protests.

And more recently, the #FeesMustFall movement in 2015 and 2016 has raised important awareness around ensuring access to education for students from the lowest-earning households.

The recent spate of violent protests on some university campuses, however, seems to transcend the boundaries of what can rightfully be termed as “protest action”.

When students at the University of KwaZulu-Natal (UKZN) and the Durban University of Technology caused severe physical damage and disrupted classes at the beginning of the year, UKZN vice-chancellor, Professor Nana Poku, condemned their actions in no uncertain terms as “organised crime”.

And he is right.

This kind of behaviour is nothing but opportunistic criminality in the guise of legitimate protest.

A few weeks after the violence erupted on campuses in KwaZulu-Natal, students on the University of the Free State (UFS) Qwaqwa campus went on a similar rampage, throwing stones at protection officers, vandalising buildings and raiding the university dining hall.

There are distinct differences between these acts and the majority of past student protests.

In most cases, current issues represent a much narrower interest than in the past, affecting only a certain section of the student population, and often revolving around the administrative processes concerning funding.

At UKZN, the main issue seems to have been students demanding to register even though they had historical debt.

At the UFS Qwaqwa campus, it was about a decision by the National Student Financial Aid Scheme (NSFAS) to pay accommodation allowances for students residing off campus directly to landlords and not to students themselves.

Apart from affecting a relatively small number of students, the “fight” was not per se with university management.

Universities South Africa (USAf) pointed out that many of the issues raised by students this year were actually sector challenges and fell outside the control of tertiary institutions.

Regardless of this, institutions regularly bend over backwards in an attempt to find workable interim solutions and making financial concessions to accommodate affected students.

Professor Poku relates how at UKZN the concessions made towards students with historical debts amounted to more than R1 billion.

At the UFS, apart from similar concessions, we also offered students allowances for food and books amounting to more than R71 million this year, while they are waiting for their NSFAS subsidies to be released – a major impact on cashflow management.

Despite these gestures of goodwill, a small group of aggrieved students still went ahead with violent acts, causing millions of rands of damage on campus and creating an atmosphere of intimidation and fear.

University campuses today are vastly different spaces from what they used to be in the 1970s and 1980s, as a result of drastic and far-reaching changes in the educational landscape over the past few decades.

Access to higher education has opened up and is no longer restricted to high-income households.

The total number of students enrolled at higher education institutions increased by almost 70 percent between 2002 and 2020, growing to just more than one million in number.

Coupled with that, tertiary institutions have gone through radical transformation processes, ensuring that they not only embrace diversity, but respect human rights and social justice through fair process and policy.

At the UFS, for example, we have had well-considered, comprehensive transformation over several years in all spheres of operation, enabling us to become an institution where diverse people feel a sense of common purpose and where the symbols and spaces, systems and daily practices all reflect commitment to openness and engagement.

We also have various initiatives to ensure that students are successful in their studies, ranging from tutorial programmes to language, writing and psychological support.

Policies and structures are continuously being implemented and reviewed to embrace social justice in all its forms, with deliberate dialogue opportunities and avenues created for raising concerns and addressing them.

At the UFS, student success is a social justice imperative.

Great care is also taken to involve our student leadership in governance on all levels, with a high level of student participation in all UFS governing structures.

Despite all the different recourses available to them, and a genuine culture of participation and caring cultivated on our campuses, disgruntled splinter groups in the student body still routinely reach for the most destructive weapon in their arsenal of options, namely violent protests.

These protest actions also often seem to jump the gun, as they happen in tandem with and despite fruitful, progressive negotiations with elected student leaders.

Not only is this incredibly frustrating – it disrespects the rights and wishes of the overwhelming majority of students, and completely challenges the notion of “negotiation and engagement in good faith”.

There are no winners in the wake of ill-considered, violent acts of vandalism.

Offending students are no closer to a solution – in fact, they may find themselves suspended and in trouble with the law to boot.

By disrupting classes and preventing access to campuses, they are effectively robbing their fellow students of the opportunity to work towards obtaining a qualification.

Affected institutions are impacted in their ability to provide quality education to students and in fulfilling their wider society-focused mandate.

On top of that, potential donors and investors in the South African higher education sector are discouraged.

The sustainability and very survival of higher education institutions are ultimately at stake, as especially small and medium-sized universities simply cannot continue to bear the financial and operational burden that each violent protest brings.

It has become necessary to take a tough stance against offenders who perpetrate senseless acts of violence and place students and staff members in danger on our campuses.

At the UFS, we have always been very accommodating towards protesting students, not only as a constitutional right, but our approach in dealing with student misconduct has a strong element of restorative justice.

But we have decided to take a hard-line approach against the offenders in these latest acts of violence and destruction – opposing bail and instituting emergency disciplinary processes against them, resulting in immediate suspensions and sanctions which could lead to expulsion.

We need to send a clear message that blatant acts of criminality will simply not be tolerated on university campuses.

We also appeal to political parties under whose banners many of these destructive activities are undertaken to publicly condemn these acts and to call their members to order.

Throughout the course of history, we have come to associate university campuses with arenas where free speech is encouraged, and social ills are pointed out.

This role should be cherished, continued and encouraged – “reclaiming” back the university campuses as spaces for discourse.

But equally important is the responsibility to use your right to freedom of expression in such a way that you do not violate the rights of other individuals or jeopardise the continued operation of the very institution you all form part of – and, by implication, negatively affecting the wider interests of the society it serves.

The role of universities is, after all, not only to provide good workers and innovative thinkers for the job market.

We need to cultivate good citizens, who can make a meaningful difference to society.

Teaching and encouraging mutual respect should be a vital part of any university curriculum.

By letting criminality go unpunished and not speaking out to these acts, we are contributing towards a culture of entitlement, where people readily resort to criminal acts when they do not get what they believe they are entitled to.

This cuts directly across what institutions for higher learning aim to achieve and bodes for a dangerous future.

  • Professor Francis Petersen is the rector and vice-chancellor of the University of the Free State

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